Iron ore edges higher as COVID curbs ease in some areas of China
Dalian and Singapore iron ore futures edged higher on Monday, supported by easing COVID-19 restrictions in some areas of China, but gains were limited by concerns over the country’s persistent zero-case policy and ailing property sector.
The most-traded January iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended morning trade 0.2% higher at 717 yuan ($102.29) a tonne, off a session-high 728 yuan.
On the Singapore Exchange, benchmark October iron ore was up 0.1% at $98.10 a tonne, as of 0400 GMT, after climbing as much as 2.4% in early trade.
The Chinese city of Chengdu will resume production and life “in an orderly manner” from Monday following more than two weeks of COVID-19 lockdowns.
“Restrictions are being eased on the back of locally transmitted cases having fallen to… (the) lowest level since early August,” StoneX senior metals analyst Natalie Scott-Gray said.
However, she said China was unlikely to lift its zero-COVID policy “until at least the end of October”, or after the ruling Communist Party’s congress beginning Oct. 16, during which President Xi Jinping is expected to secure an historic third term.
Sentiment was further boosted as China’s state planner said the government would speed up fund injections to expedite project construction and boost domestic consumption.
China’s central bank on Monday lowered the borrowing cost of 14-day reverse repos and stepped up cash injections to counteract higher demand towards the quarter-end.
Rebar on the Shanghai Futures Exchange SRBcv1 rose 0.8% while hot-rolled coil SHHCcv1 climbed 0.5%. Stainless steel SHSScv1 was flat, however.
Dalian coking coal DJMcv1 and coke DCJcv1 gained 2.9% and 2.8%, respectively.
A 2.82 million tonne increase in Australian and Brazilian iron ore shipments and a 3.37 million tonne surge in arrivals at Chinese ports over the past week, however, “might mitigate some of that early optimism”, said Navigate Commodities Managing Director Atilla Widnell.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Subhranshu Sahu)